Estate Planning

Attorney Olivia Kay Mote Joins the Firm!

Eustice, Laffey, Sebranek & Auby, S.C. is pleased to announce that Attorney Olivia Kay Mote has joined the firm as an associate. Olivia is a 2016 graduate of the University of Wisconsin Law School.  She will focus her practice on the areas of Estate Planning, Elder Law, Business Law, Family Law, and Employment and Civil Rights Law (including gender identity and sexual orientation matters).

With locations in Sun Prairie and Waunakee, Eustice, Laffey, Sebranek & Auby, S.C. now boasts nine attorneys assisting financial institution, business, and individual clients in a wide variety of legal areas.  To schedule an appointment with Attorney Mote, please call our Sun Prairie office at (608) 837-7386.

Welcome Olivia!

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ELSA Attorneys Organize, Participate in FREE Sun Prairie Legal Clinic

Free Legal Clinic Starts Tuesday

If you live in the Sun Prairie area and have legal questions, there is now another local resource available.  The Sunshine Supper Legal Clinic will open its doors tonight, September 16, 2014, from 5 to 7 p.m. at Sunshine Supper (1632 West Main Street, Sun Prairie), to answer your legal questions free of charge.

ELSA Attorneys will be on hand to answer your questions regarding various fields of law, including employment law, family law, immigration law, and landlord-tenant issues.  Individuals whose questions are not fully resolved will be referred to outside resources, including the State Bar’s Lawyer Referral & Information Service, Community Justice, Inc., Legal Action of Wisconsin or the State Public Defender’s Office.

The clinic is the result of months of hard work by ELSA attorney and shareholder Joshua J. Kindkeppel, as detailed in this article from The Star, as well as ELSA attorneys Kathleen Curran and Kevin Henry, and other local practitioners.

Attorney Kindkeppel practices in the areas of business, real estate, employment, and civil litigation.  He was elected and served as president of the Dane County Bar Association in 2012-13, and collaborated with long-time Madison attorney Joseph Melli to create the Joseph A. Melli Mentorship Program to assist young Dane County attorneys. Kindkeppel is also active in the Sun Prairie Rotary Club, and serves on the planning committee for the Sun Prairie Kindness Retreats.

Attorney Curran practices in the areas of family law, estate planning, civil litigation, employment law, and personal injury.

If you cannot make it to tonight’s clinic, it will return on October 21, 2014, and on the third Tuesday of each following month.

The U.S. Supreme Court’s Decision in U.S. v. Windsor and Its Effect on Estate Planning

On June 26, 2013, the United States Supreme Court issued an opinion, U.S. v. Windsor, in which it struck down a major part of the Defense of Marriage Act (DOMA) as unconstitutional because it denies same sex couples equal protection under the law in violation of the Fifth Amendment.  In that case, Edith Windsor, who was married to her same sex partner in New York, where the couple also resided, and which recognizes full marriage rights for same sex couples, was denied the opportunity to claim the marital exemption from federal estate taxes upon her partner’s death based on the definition of marriage under Section 3 of DOMA.  This Section defines marriage for federal purposes as “only a legal union between one man and one woman.” 1 U.S.C. § 7.  The U.S. Supreme Court, however, in a 5-4 decision determined that Section 3 of DOMA unconstitutionally denied Edith Windsor from taking advantage of the estate tax marital exemption, which would have been available to opposite sex married couples.  This thus violated the Fifth Amendment’s directive for equal protection under the laws by singling out and demeaning a certain class of people – same sex couples.  The Court also indicated that this provision interferes with the states’ power to regulate marriage.  Therefore, the Court struck down this section of DOMA.  Windsor, No. 12-307 (U.S. 2013).  For further information on the Windsor decision, see the article, “Supreme Court strikes down Defense of Marriage Act in estate tax case” at http://www.journalofaccountancy.com/news/20138222.htm.  See also the article, “The Same Sex State Death Tax Trap Post DOMA” at  http://www.forbes.com/sites/ashleaebeling/2013/07/01/the-same-sex-state-death-tax-trap-post-doma/.

The effect of this ruling is that legally married same sex couples can now claim the same federal benefits and marital tax exemptions as opposite sex married couples can.  It remains unclear, however, whether federal benefits will be available to same sex couples who do not live in a state that recognizes same sex marriage.

What this means for estate planning is that the same estate planning tools and techniques utilized in opposite sex couples’ estate plans to minimize the federal estate tax owed may be used in same sex couples’ estate plans in states that allow same sex marriage.  In states that do not recognize same sex marriage, however, these estate planning techniques would not be effective and same sex couples in those states would not be able to avoid estate taxes in that way.

In Wisconsin, though domestic partnerships are recognized between same sex couples, same sex marriage is not.  It is therefore uncertain whether same sex couples would be able to take advantage of the federal estate tax marital exemption, since these couples cannot be legally “married” in Wisconsin.  We are hoping, however, that both the federal and state governments will provide guidance as to these issues and questions in the near future and will establish processes and procedures that will facilitate the implementation of these new policies.

What to Expect From the New Tax Bill

On January 1, 2013, Congress finally passed a tax bill that avoided the so-called “fiscal cliff” and included significant changes to the tax laws.  Some of the key provisions are summarized here.

The change that will probably have the greatest impact on most taxpayers is the expiration of the payroll tax reduction.  Congress did not renew the 2% payroll tax holiday, so the employee portion of the Social Security tax will return to 6.2%, thus decreasing slightly most employees’ paychecks.

Also of significant impact: the Bush income tax cuts were made permanent for all but the highest-income-earners.  For this purpose, the highest-income-earners are those who have taxable income over $400,000 for singles and $450,000 for married couples.  The income tax rate for them was raised from 35% to 39.6%.  The capital gains tax rate on these highest-income-earners was also increased to 20%.

This chart, from the Kiplinger Tax Letter, summarizes the income tax rates for 2013:

Marrieds: If taxable income is The tax is
Not more than $17,850 10% of taxable income
Over $17,850 but not more than $72,500 $1,785.00 + 15% of excess over $17,850
Over $72,500 but not more than $146,400 $9,982.50 + 25% of excess over $72,500
Over $146,400 but not more than $223,050 $28,457.50 + 28% of excess over $146,400
Over $223,050 but not more than $398,350 $49,919.50 + 33% of excess over $223,050
Over $398,350 but not more than $450,000 $107,768.50 + 35% of excess over $398,350
Over $450,000 $125,846.00 + 39.6% of excess over $450,000
Singles: If taxable income is The tax is
Not more than $8,925 10% of taxable income
Over $8,925 but not more than $36,250 $892.50 + 15% of excess over $8,925
Over $36,250 but not more than $87,850 $4,991.25 + 25% of excess over $36,250
Over $87,850 but not more than $183,250 $17,891.25 + 28% of excess over $87,850
Over $183,250 but not more than $398,350 $44,603.25 + 33% of excess over $183,250
Over $398,350 but not more than $400,000 $115,586.25 + 35% of excess over $398,350
Over $400,000 $116,163.75 + 39.6% of excess over $400,000
Household heads: If taxable income is The tax is
Not more than $12,750 10% of taxable income
Over $12,750 but not more than $48,600 $1,275.00 +15% of excess over $12,750
Over $48,600 but not more than $125,450 $6,652.50 + 25% of excess over $48,600
Over $125,450 but not more than $203,150 $25,865.00 + 28% of excess over $125,450
Over $203,150 but not more than $398,350 $47,621.00 + 33% of excess over $203,150
Over $398,350 but not more than $425,000 $112,037.00 + 35% of excess over $398,350
Over $425,000 $121,364.50 + 39.6% of excess over $425,000

The standard deduction and personal exemptions were raised slightly, but these, along with itemized deductions, are being phased out for high-income-earners.  For these purposes, high-income-earners are those whose Adjusted Gross Income (AGI) is over $250,000 for singles and $300,000 for married couples.

The alternative minimum tax (AMT) exemptions were also increased and will be permanently adjusted for inflation.

The Medicare surtax for high-income-earners (total earnings of over $200,000 for singles and $250,000 for married couples), which was included in the health care reform bill, will take effect in 2013, as will the Medicare surtax on net investment income for high-income-earners (modified AGI of over $200,000 for singles and $250,000 for marred couples), both at the rate of 3.8%.

The tax rates for Social Security will also be higher, due to the expiration of the 2% tax holiday and the 0.9% increase for high-income-earners, mentioned above.  The Social Security wage base, however, was raised to $113,700, and Social Security benefits go up by 1.7%.

With regard to the federal estate and gift tax, the $5 million exemption was made permanent and was increased for inflation to $5.25 million in 2013 and will continue to be indexed for inflation.  This continues to be the unified exemption amount for the estate and gift tax, and it continues to be portable between spouses.  Portability means that a married couple has $10.5 million in exemption between the two of them with the first spouse to die passing his or her unused share to the surviving spouse.  In order to use this portability, however, the surviving spouse must file an estate tax return indicating that election.  The tax rate on estates beyond the exemption amount was increased from 35% to 40%.

The annual gift tax exclusion was also increased to $14,000 per donee.  This means that in 2013 a person may gift $14,000 per donee without being required to report it or count it towards the $5.25 million lifetime exemption amount.

If you have questions regarding the new tax laws or about how these changes will affect your estate plan, please contact us, and we will be pleased to assist you..

Ten Reasons To Do Your Estate Planning NOW!

  1. To control the distribution of your assets and ensure your assets go to whom you want, when you want, how you want
  2. To decide and control who you want to raise your minor children and how any inheritance your children receive will be used and distributed
  3. To ensure children from prior marriages are included as recipients/beneficiaries of your estate
  4. To make succession planning work for the continuation of your small business
  5. To maintain the privacy of your estate
  6. To avoid the cost, expenses and inconveniences of probate
  7. To preserve your property through the generations
  8. To designate a charity that is important to you
  9. To protect spendthrifts from wasting away their inheritance.
  10. To attempt to preserve family dynamics

The result of estate planning – Peace of Mind!.

National Estate Planning Awareness Week

If you are amongst the estimated 120,000,000 Americans who do not have up-to-date estate plans, you probably do not know that this week, October 17–23, 2011, is National Estate Planning Awareness Week.  In 2008, the House of Representatives passed a bill making the third week in October a week to build awareness of the need for estate planning and to educate the public regarding estate planning resources and services.

This bill was passed in response to the general lack of awareness that many Americans have as to the importance of estate planning and the consequences of not having a plan in place.  Many Americans assume that only the wealthy need estate planning, but in a time when life expectancies are rising along with the cost of healthcare and retirement planning is falling increasingly on the shoulders of the individual, no one can afford to be without a plan for the future.

So if you are one of those Americans without an updated estate plan, this is a great time for you to take that step to safeguard your future security and that of your family and loved ones.  Careful estate planning can be an essential tool to ensure that you have adequate funds for retirement, that the assets you have built up over your lifetime are preserved for the benefit of your family and heirs, and that, should you in the future be unable to make healthcare or financial decisions, the person of your choice is designated to do so for you.

If you are interested in learning more about the estate planning options that would be most appropriate for your situation, you can visit the National Association of Estate Planners & Councils (NAEPC) website for educating the public about the many aspects of estate planning (http://www.estateplanninganswers.org/) or you can call and make an appointment to speak to one of our firm’s estate planning attorneys..